The intergovernmental agreement, first announced in December last year, is modelled on the requirements of the Foreign Account Tax Compliance Act (FATCA) introduced by the United States to ensure the tax compliance of its citizens with international interests.
The agreement will result in Manx financial institutions providing a broad range of information on the investments of UK resident taxpayers, which will then be shared automatically with the UK by the IoM tax authorities.
It was signed last Thursday by Manx chief minister Allan Bell and UK treasury exchequer secretary David Gauke.
In a statement issued by the Manx chief minister’s office, under the current timetable for implementation the two governments have agreed to start exchanging additional information from 2016.
Bell said, by extending the automatic tax exchange information with the UK, the IoM was sending out a message to its neighbours and the wider world that the Island is “a responsible centre for top quality international business”.
He added: “Today’s signing is a significant step towards that global standard and further proof that the tax haven moniker in relation to the Isle of Man is well and truly dead, as David Cameron recognised recently in the House of Commons.”
"We have a long-established policy of complying with global standards, and we saw some time ago that enhanced automatic exchange of information on the FATCA model was becoming the new global standard in tax transparency.
“The agreement is the latest of several automatic information exchange agreements entered into by the IoM and the UK Government, intended to improve its ability to tackle cross-border tax evasion."
The Isle of Man had already committed to automatically sharing information on personal savings income with the UK and other European Union countries following the EU Savings Directive of 2009.
An IoM tax disclosure facility with the UK was also opened in April this year under which UK resident individuals, companies and trustees can make a voluntary disclosure to come clean on undisclosed assets and income from the IoM which have not previously shown on their UK tax returns.
This agreement included a ‘memorandum of understanding’ – signed between the Manx government and HMRC – under which a bespoke IoM disclosure facility was opened for UK taxpayers wishing to ‘regularise their tax affairs’.
Guernsey has similarly announced its intentions of extending a FATCA-style tax disclosure agreement with the UK, while Jersey is also consulting on a similar model, but so far the IoM is the only dependency to have signed off on such an agreement.
